ANZ CEO dismisses UBS ‘liar loans’ report

Major bank boss Shayne Elliott has explained to a parliamentary committee why the findings of a recent UBS report are not a true reflection of the quality of the bank’s lending processes.

ANZ chief executive Shayne Elliott appeared in Canberra on 11 October where he answered questions before the House of Representatives Standing Committee on Economics, commonly known as the major bank review.

Committee chair David Coleman MP asked the ANZ boss for his response to the claims made in the UBS "liar loans" report — specifically, a UBS claim that 45 per cent of ANZ [transactions] have been subject to false or inaccurate representations by the borrower.

“What was missing from the report and some of the journalists' articles afterwards was that we don't just rely on what customers fill out on a form,” Mr Elliott explained.

“We've been in business for 185 years, and it's not new to us that sometimes customers forget to tell us all the full details of their financial situation. So we have all sorts of systems in place and checks and balances to mitigate that, and that's really very important as part of the process.”

Mr Elliott directed the committee’s attention to the size of the UBS survey, comparing it to the number of ANZ’s home loan customers.

“We have a million mortgages on our books alone at ANZ,” he said. “The entire sample size for that survey was fewer than 1,000 for the whole country.

“Based on our market share, that means that survey was based on 150 ANZ customers; to then extrapolate that to say that that's true for the whole million, I think is a bit of a stretch.”

ANZ’s deputy chief executive Graham Hodges added that APRA has conducted two hypothetical borrower scenario investigations in the last three years and said that ANZ benchmarked “very well” in those scenarios.

“I think it involved about 18 participants in the sector and showed where we sat around a range of those areas. On many of those — most, I would say — we were at the conservative end of that.”

The UBS report, which claimed that Australian banks hold $500 billion in "liar loans", received widespread media attention and has been dismissed by mortgage industry associations.